HUSKY insurers say they won’t cut provider rates; critics still skeptical

The heads of the three insurance companies in the HUSKY program said Friday that they are not attempting to lower the rates they pay doctors and hospitals below previously allowed levels, even though their contracts with the state now permit it.

But that did not appear to reassure members of the council that oversees HUSKY, who expressed concern that the insurers could reduce payments in the future and prompt health care providers to stop treating HUSKY patients.

The state contracts with the managed-care companies to administer HUSKY, which covers more than 400,000 mostly low-income children and parents. The companies receive a set fee per enrollee from the state, and contract with health care providers.

Starting in 2008, the state Department of Social Services set a minimum level–known as a floor–for what insurers could pay providers. The department, which is negotiating new contracts with the insurers, removed that requirement in August.

Mark Schaefer, DSS’ director of medical care administration, said removing the floor could save the state money because it is expected to allow the department to negotiate monthly payments to the insurers that are about 50 cents lower per enrollee than they would be with the floor in place.

Patient advocates, physician groups and lawmakers have criticized the move, saying that reducing the already low rates paid to providers could make it harder for patients to get care.

On Friday, the CEOs of the three managed care companies told the Medicaid Care Management Oversight Council they were not seeking to pay doctors or hospitals less than what was previously allowed.

“Primarily, the removal of the floor means nothing to us,” said Rita Paradis, CEO of Aetna Better Health.

Paradis said the only contracts Aetna had negotiated at rates below the floor were for vendors of durable medical equipment.

As for health care providers, she said, “We’re not going there. That’s not our goal.”

The CEOs of AmeriChoice by UnitedHealthcare and Community Health Network made similar statements. Community Health Network CEO Sylvia Kelly said the company was also seeking to negotiate lower rates with lab service providers.

Managed care companies have been allowed to negotiate lower rates with durable medical equipment vendors and lab service companies since last year, when the minimum payment levels for them were removed. DSS removed the payment floor for medical providers in August.

“We have no intention of reducing provider rates and we will negotiate with hospitals as we always have,” Kelly said.

But council member Ellen Andrews, executive director of the Connecticut Health Policy Project, said she was not convinced.

“I think it’s incredibly naïve of the department to think that reducing rates or opening the door to reducing rates will not impact access,” she said.

Andrews said she had seen a letter from Aetna to a provider saying the company wanted to reduce payments to 30 percent less than the previous minimum rate.

Paradis said she was not familiar with the letter. The company planned to inform providers that it had the capability to lower rates below the floor, but does not intend to do so, she said.

Schaefer defended the change and said the department will monitor to ensure that patients do not lose access to care.

Removing the floor frees the managed care companies to base their payments on what the market allows, not an “arbitrary limitation” set by the department, Schaefer said.

The floor was put in place after the legislature appropriated additional money for HUSKY providers, and was used to ensure that the money actually went to providers. Contracts that called for providers to be paid less had to be renegotiated.

But eliminating the floor now is a much less significant change, Schaefer said, because the insurers cannot unilaterally lower rates in existing contracts.

“You have to remember there are two parties that have to agree to any rewriting of those contracts and it is very difficult once rates are established to then go back and to ask for reductions,” he said.

Critics of the move said that does not reflect the dynamics between providers and insurance companies.

Many Connecticut doctors work in solo or small practices and do not have significant bargaining power when negotiating with managed care companies, said Ken Ferrucci, senior vice president of government and society affairs for the Connecticut State Medical Society.

Ferrucci said he was not aware of any doctors being asked to reduce their rates, and said it was good to hear the CEOs say they do not plan do so. But he said doctors would prefer a guarantee.

“If the floor is removed, there’s always the possibility that they can, and that raises a concern,” he said. “I don’t think anybody flat out said ‘we will not do it,’ they said ‘we aren’t’ or ‘we don’t plan on it.'”

The medical society was one of nine groups that signed a letter to the federal Centers for Medicare and Medicaid Services last month, arguing that removing the payment floor violated the federal waiver under which the state operates HUSKY.

Schaefer said removing the floor did not require a change to the waiver.

State Sen. Toni Harp, D-New Haven, who co-chairs the council, said she expects that the legislature will have to address the issue going forward.

The floor was put in place out of concern that money paid to managed care companies did not trickle down to providers, she said.

“If we didn’t learn from the Reagan administration and the Bush administration about trickle-down theory, we should have learned it from this program,” she said. “It just didn’t work.”